Dairy Trends: drastic fall in butter price continues

It was another week of bloodshed on the dairy markets, with butter prices leading the charge downwards for the second week in a row.

There was €400/t knocked off the price this week, which is a significant reduction, given that butter prices fell last week by €385/t.

That means there is almost €800/t gone from butter prices in two weeks, which is a 13% reduction.

Other commodities fell also, but not to the same degree. Whole milk powder (WMP) fell by €140/t, skim milk powder (SMP) fell by €55/t, while cheddar cheese fell by €50/t.

The butter price drops are sending markets into a bit of a negative frenzy, which have caught many observers by surprise.

Some say the price cuts are driven by market sentiments rather than core fundamentals. Either way, commodities are falling and we’re already seeing the impacts on Irish milk price.

There was some better news at the Global Dairy Trade (GDT) where the index fell by 0.8%, which is relatively flat. The amount of product traded, at just over 39,000t, was lower than the last auction but is still a relatively large amount.

Price drops were recorded for all key categories, with WMP recording a 0.8% reduction, SMP recording a 0.3% reduction, butter oil (anhydrous milk fat) dropping by 1.5% and butter dropping by 0.8%.

The only product category to see a price rise was cheddar cheese, which increased by 2.2% and GDT cheddar is now trading at €4,091/t, which, incidentally, is identical to the European spot price.